Originally published in World Affairs
‘Iran’s economy continues to flounder. It is hemorrhaging money in Syria, and years of sanctions have left it suffering from high unemployment (a quarter of youth are jobless) and the world’s second-highest inflation rate (20 percent), despite a minor boost provided by an interim nuclear agreement. Now, however, Iran’s economic woes are beginning to affect its ability to project power across the region, potentially leaving its most dangerous international proxy in the lurch.
Sources close to Hezbollah told Lebanese media last week that Iranian funds to the group are drying up. In the words of Hezbollah expert Matthew Levitt, “Iran is not in good financial shape; the money from Tehran [to Hezbollah] doesn’t come as it used to.” As a result, the group’s military wing has reportedly ordered its overseas cells and external security units to find new revenue streams, and its social services have also had to cut costs.’
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